Court backs OFT over ‘unfair’ bank charges

A High Court judge has ruled in favour of the Office of Fair Trading (OFT) and against Britain’s biggest banks in a dispute over ‘unfair’ overdraft charges.

Mr Justice Andrew Smith has authorised the OFT to decide whether unlawful overdraft penalties levied on bank customers are subject to ‘unfair contract’ rules.

The highly complex test case follows a flood of complaints from bank customers who have been trying to reclaim the charges, arguing that the fines are too high.

Some experts predict that banks have made between £2bn and £3.5bn a year in overdraft fees in the last six years. Once the final outcome is reached, banks and building societies may be forced to pay billions of pounds back to those customers affected.

The OFT has described the judgement as an ‘important early milestone’ for its investigation into an area of ‘high consumer interest.’

However, Angela Knight from the British Bankers’ Association, emphasised that the case is still in its early stages: ‘We need to take what the judge has said very carefully and not jump to conclusions. This is the start of a process,’ she said.